Advocates fear loss of state fund to help Jacksonville homebuyers

Kevin Turner

Sunday

Apr 24, 2011 at 12:01 AM

The Jacksonville Housing and Neighborhoods Department approved 26 Jacksonville residents last week to receive about $15,000 each in down payment assistance so they could qualify to purchase new or existing homes.

But they could be the last ones to do so after the city's program ran out of money that day, said Wight Greger, the department's director.

That's because the state's William E. Sadowski trust fund, which has helped fund affordable housing efforts in the state's counties and municipalities, could disappear during the current legislative session.

In 2010, funds from the trust helped about 200 people in Duval County buy new and existing homes, Greger said, but if either a legislative effort to fold it into a larger fund or divert it to the state's general fund is successful, affordable housing advocates fear such help will be a thing of the past.

Since the Legislature approved the Affordable Housing Act in 1992, Jacksonville has received about $100 million in Sadowski trust funds to help first-time homebuyers make down payments. The city has also received money through various other programs, including Florida's State Housing Initiatives Partnership (SHIP) program, which provides funds to county and city governments to create and maintain affordable housing. The trust fund is named after a former Department of Community Affairs secretary and affordable housing champion who was killed in a 1992 plane crash.

The $100 million Jacksonville has received from the trust fund since 1993 has been a good investment because those allocations have attracted an additional $800 million in private sector funding, Greger said. There are other programs through which Sadowski funds help the real estate economy, she said. About 30 percent of the trust fund is allocated to low-interest loans to allow owners to renovate apartment buildings and keep rents low, she said.

The Sadowski trust fund is financed through a documentary stamp tax of 20 cents on every $100 of assessed or sale value in Florida real estate transfers, said Valerie Saunders, former president of the Florida Association of Mortgage Professionals.

This month, 56 members of the Northeast Florida Association of Realtors went to Tallahassee to lobby for the trust fund and three other issues, said NEFAR Director of Government Affairs Nancy Garcia. The group met with most of the senators and members of the Legislature who represent Northeast Florida, she said.

With credit tight, Garcia said, it's especially important to have the funds available to assist first-time homebuyers. That's why members of Realtors associations, as well as builders and mortgage brokers, traveled to Tallahassee to ask that the trust fund be preserved.

'Redeploy the money'

On April 7, the state Senate approved a bill that would maintain the document stamp tax funding the Sadowski trust, but would divert the money to the state's general fund. Sen. Don Gaetz, R-Niceville, chairman of the Senate Budget Subcommittee on Transportation, Tourism, and Economic Development Appropriations, said the bill was introduced in response to a proposal by Gov. Rick Scott to eliminate the Sadowski trust fund.

"My take was not to eliminate the fund, but to redeploy the money," Gaetz said.

Gaetz said that the budgetary bill was necessary because the funds are necessary elsewhere in the state's budget. In previous years, the Legislature has commonly moved money from trust funds, or "swept" them, to plug budgetary holes.

And, he added, if passed it wouldn't mean there would be no money for affordable housing if it becomes law - there would also be allocations to support affordable housing, they'll just be made on a year-by-year basis out of the General Fund, he said. For the 2011-12 fiscal year, that would include $5 million for counties and cities through SHIP next year as well as $32.5 million for down payment assistance programs, he said.

Saunders said the year-by-year approach isn't as good as a dedicated fund.

"Once you put a designated source into a general account, you're always going to have other interest groups or trade organizations who feel they deserve the money more," she said.

Another bill, approved in the Florida House April 7, would create a "super trust" called the State Economic Enhancement and Development (SEED) fund. That would mix Sadowski trust fund money with money from numerous other funds.

"The idea would be that affordable housing efforts would have to compete with other things for the money," Garcia said.

According to the state's Office of Public Information, the combined fund will allow the state more flexibility in how it allocates funds that were previously designated strictly for transportation, housing, job creation and economic support and development. Supporters say that will make the state more competitive.

Jaimie Ross, president of the Florida Housing Coalition, said even if the trust money is preserved under SEED, money would be diverted away from affordable housing.

"I think it will drop to zero," Ross said. "I don't think affordable housing will be the priority."

Saunders said affordable housing programs are important because without them, many Floridians won't ever own a home.

"I do a lot of affordable housing transactions," she said. "I see the work these dollars do. There are people who work hard all of their lives for home ownership, and this is their only opportunity."

Either bill's passage into law could prove detrimental to Jacksonville's housing market because either way a dedicated source for affordable housing would be gone, Greger said.

"If Sadowski goes away, we aren't going to be able to get buyers into homes," she said. "That will have an impact on the private lending level, it will have an impact on real estate, and it will have an impact on construction. Without demand, there will be no need to build or renovate homes."

kevin.turner@jacksonville.com, (904) 359-4609

Never miss a story

Choose the plan that's right for you.
Digital access or digital and print delivery.